BORGWARNER INC.
2004 STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AWARD AGREEMENT
Stock Option Grant Awarded to _____________________
Column (1) Column (2) Column (3) Column (4) Column (5) Column (6)
Date of Number of Exercise Type of Stock Expiration Cumulative
Shares Subject Price Per: Option: Date of Percentage
Stock Exercise Schedule
Option Option of Stock Option:
M/D/Yr # Shares $-- Non-Qualified M/D/Yr _% on M/D/Yr
Stock Option % on M/D/Yr
1. Grant of Stock Option. Pursuant to
Section 6 of the Borg Warner, Inc. 2004
Stock Incentive Plan, (the "Plan"),
BorgWarner Inc., a Delaware corporation,
hereby grants to the individual named
above, an employee of the Company or an
Affiliate (the "Optionee"), an option to
purchase from the Company the number of
its shares of common stock, $.01 par
value shown above in Column 2 of this
Award Agreement, upon and subject to the
terms and conditions set forth in the
Plan and this Award Agreement (the
"Shares"). Capitalized terms not defined
herein shall have the meanings specified
in the Plan.
2. Date of Grant. The date of grant
of this Stock Option is the date set
forth above in Column 1.
3. Type of Stock Option. This Stock
Option is not intended to qualify as an
incentive stock option within the meaning
of section 422 of the Internal Revenue
Code, and this Award Agreement shall be
interpreted and treated consistently with
the characterization of the Stock Option
as a Non-Qualified Stock Option.
4. Stock Option Price. The option
price per share of Stock covered by the
Stock Option shall be the price set forth
above in Column 3 of this Award Agreement.
5. Expiration Date. Unless the Stock
Option is previously terminated pursuant
to the terms of this Award Agreement and
the Plan, the Stock Option granted by
this Award Agreement shall terminate on
the date shown above in Column 5 of this
Award Agreement.
6. Exercise of Stock Option.
A. The Stock Option shall become
exercisable as of the date set forth
above in Column 6 according to the
percentage shown for such date
("Exercisable Date"); provided that at
all times during the period between Date
of Grant and the Exercisable Date the
Optionee has been employed by the Company
or an Affiliate. The Committee (as such
term is defined in the Plan) has, in its
sole discretion, the authority to, in
whole or in part, accelerate the
exercisability of the Stock Option. The
Stock Option may be exercised only to
purchase whole Shares and in no case may
a fraction of a Share be purchased. The
right of the Optionee to purchase Shares
may be exercised in whole at any time or
in part from time to time after (and to
the extent) the Stock Option has become
exercisable and prior to the tenth
anniversary of the Date of Grant;
provided, however, that no portion of the
Stock Option shall be exercisable unless
(except as hereinafter provided in this
Section 6) the Optionee at the time of
exercise is, and at all times from the
Date of Grant has been employed by the
Company or an Affiliate. A Termination
of Employment (as such term is defined in
the Plan) shall not be deemed to have
occurred if the transfer, promotion,
reassignment or similar personnel move of
the Optionee, at the request of the
Company or an Affiliate, from any one
entity within the Company or Affiliate to
another entity within the Company or
Affiliate results in the Optionee being
immediately employed with such other
entity.
B. If the Optionee dies while employed
by the Company or an Affiliate, the
Optionee's estate shall be permitted to
exercise the Stock Option to the extent
exercisable on the date of the Optionee's
death or to the extent that the
exercisability of the Stock Option may be
accelerated by the Committee. The Stock
Option may be exercised for a period of
one year from the date of such death or
until the expiration of the Stock Option,
whichever period is shorter.
C. If the Optionee incurs a
Termination of Employment by reason of
Disability or Retirement (as such terms
are defined in the Plan), the Optionee
shall be permitted to exercise the Stock
Option to the extent exercisable at the
time of the termination or to the extent
that the exercisability of the Stock
Option may be accelerated by the
Committee. The Stock Option may be
exercised for a period of three years
from the date of such termination or
until the expiration of the Stock Option,
whichever period is the shorter;
provided, however, that if the three year
period is the applicable period and the
Optionee dies within such three year
period, any unexercised Stock Option held
by such Optionee shall, notwithstanding
the expiration of such three year period,
continue to be exercisable to the extent
to which it was exercisable at the time
of death for a period of twelve (12)
months from the date of such death or
until the expiration of the Stock Option,
whichever period is the shorter.
D. If the Optionee incurs a
Termination of Employment and such
Termination of Employment is involuntary
and without Cause (as such term is
defined in the Plan), the Optionee shall
be permitted to exercise the Stock Option
to the extent exercisable at the time of
the termination or to the extent that the
exercisability of the Stock Option may be
accelerated by the Committee. The Stock
Option may be exercised for a period of
one year from the date of such
termination or until the expiration of
the Stock Option, whichever period is
shorter; provided, however, that if the
one year period is the applicable period
and the Optionee dies within such one
year period, any unexercised Stock Option
held by such Optionee shall,
notwithstanding the expiration of such
one year period, continue to be
exercisable to the extent to which it was
exercisable at the time of death for a
period of twelve (12) months from the
date of such death or until the
expiration of the Stock Option, whichever
period is the shorter.
E. If the Optionee incurs a
Termination of Employment for any reason
other than as set forth in Sections 6(B),
(C) and (D) above and such Termination of
Employment is without Cause, the Optionee
shall be permitted to exercise the Stock
Option to the extent exercisable at the
time of the Termination of Employment.
The Stock Option may be exercised for a
period of five (5) business days from the
date of such termination or until the
expiration of the Stock Option, whichever
period is the shorter.
F. If the Optionee incurs a
Termination of Employment which is for
Cause, the Stock Option held by the
Optionee shall terminate at the time of
the Optionee's Termination of Employment.
7. Transferability of Stock Option.
The Stock Option and this Stock Option
Award Agreement shall be transferable by
the Optionee: (i) by will or by the laws
of descent and distribution, (ii)
pursuant to a qualified domestic
relations order (as such term is
described in the Plan), or (iii) pursuant
to a gift to the Optionee's "immediate
family" members (as such term is
described in the Plan) directly or
indirectly by means of a trust,
partnership, or limited liability
company, subject in the case of all
transfers pursuant to clause (iii),
above, to the review of the Committee or
its designee. A Stock Option shall be
exercised, only by the Optionee, by the
guardian or legal representative of the
Optionee, or permitted transferee, it
being understood that the terms "holder"
and "Optionee" include any such guardian,
legal representative or beneficiary or
permitted transferee. A permitted
transferee may transfer a Stock Option
only by will or by the laws of descent
and distribution.
8. Exercise of Stock Option; Payment.
A. If the Optionee is then employed by
the Company or an Affiliate and elects to
exercise all or part of the Stock Option
which is exercisable, he or she shall
deliver to the Company a written notice,
in a form acceptable to the Committee,
specifying the number of Shares to be
purchased under the Stock Option and an
exercise date, not more than thirty days
after the date of such notice, upon which
such Shares shall be purchased and
payment therefor shall be made.
B. If the Optionee's employment with
the Company or an Affiliate is terminated
for any of the reasons set forth in
Section 6(B) through (E) above, then any
election to exercise all or part of the
Stock Option which is exercisable shall
be done in the following manner: the
Optionee or his or her estate shall
deliver to the Company a written notice,
in a form acceptable to the Committee,
specifying the number of Shares to be
purchased under the Stock Option and an
exercise date, within the exercise period
set forth for such reason in Section 6(B)
through (E) above and with respect to
Section 6(B) through (D), not more than
thirty days after the date of such
notice, upon which such Stock Option
Shares shall be purchased and payment
therefor shall be made.
C. On the exercise date the Optionee
has specified in the notice described in
Section 8(A) or 8(B) above, the Optionee
or his or her estate shall deliver to the
Company (i) cash, certified or bank check
or such other instrument as the Company
may accept, made payable to the order of
the Company in an amount equal to the
product of the number of Shares specified
to be purchased in such notice and the
Option Price (the "Option Exercise
Amount") and within five days thereafter
payment, by cash, certified or bank check
or such other instrument as the Company
may accept, made payable to the order of
the Company, in such amount as the
Company in its sole discretion deems
necessary to satisfy its liability to
withhold federal, state or local income
or other taxes incurred by reason of the
exercise of the Stock Option or the
transfer of Shares thereupon
(collectively the "Applicable Tax"), or
(ii) unrestricted Shares owned by the
Optionee for more than six months prior
to the exercise date, the value of which
in whole Shares shall not exceed the
Option Exercise Amount, and within 5 days
thereafter unrestricted Shares owned by
the Optionee, the value of which in whole
Shares shall not exceed the Applicable
Tax, the value of such Shares for the
purpose of paying the Option Exercise
Amount and the Applicable Tax
(collectively the "Option Payment
Amount") being the Fair Market Value (as
such term is defined in the Plan) of the
Shares on the exercise date, or (iii) a
written request to the Company to
withhold, from the number of Shares
otherwise issuable upon the exercise of
the Stock Option, that whole number of
Shares having an aggregate Fair Market
Value which does not exceed the
Applicable Tax, or (iv) a combination of
the above described forms of payment that
equals the Option Payment Amount;
provided that if the Optionee is subject
to Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange
Act"), then (y) such Optionee shall have
the right to make payment of the Option
Payment Amount only at the time and in
the manner specified in Section 16 of the
Exchange Act and the rules and
regulations thereunder and (z) the
Company shall have the right to retain or
sell without notice, or to demand
surrender of, Shares or Shares issuable
upon the exercise of the Stock Option
which have a Fair Market Value on the
exercise date equal to the amount
determined by the Company as necessary to
satisfy any Applicable Tax. Upon receipt
in full of the Option Payment Amount
(including in the case of payment by
check, the receipt by the Company of
collected funds), the Optionee or his or
her estate shall be deemed to be the
owner of Shares so purchased and
certificates representing such Shares
shall thereupon be delivered to the
Optionee or his or her estate. If the
Company has entered into agreement(s)
with one or more brokerage firms to
enable the Optionee to facilitate payment
for the Shares through such brokerage
firm(s), the Optionee or his or her
estate may make use of such coordinated
procedure if he or she elects and if
allowed by law.
9. Specific Restrictions Upon Shares.
The Optionee hereby agrees with the
Company as follows:
A. The Optionee shall acquire the
Shares issuable upon the exercise of the
Stock Option (the "Stock Option Shares")
for investment purposes only and not with
a view to resale or other distribution
thereof to the public in violation of the
Securities Act of 1933, as amended (the
"1933 Act"), and shall not dispose of any
Stock Option Shares in transactions
which, in the opinion of counsel to the
Company, violate the 1933 Act, or the
rules and regulations thereunder, or any
applicable state securities or "blue sky"
laws;
B. If any Stock Option Shares shall be
registered under the 1933 Act, no public
offering (otherwise than on a national
securities exchange, as defined in the
Exchange Act) of any such Stock Option
Shares shall be made by the Optionee (or
any other person) under such
circumstances that he or she (or such
other person) may be deemed an
underwriter, as defined in the 1933 Act;
and
C. The Company shall have the
authority to endorse upon the certificate
or certificates representing the Stock
Option Shares such legends referring to
the foregoing restrictions.
10. Change in Control Cash Out. During
the sixty (60) day period from and after
a Change in Control (as such term is
defined in the Plan), the Optionee shall
have the right, whether or not the Stock
Option is fully exercisable and in lieu
of the payment of the exercise price for
the Shares being purchased under this
Stock Option, to elect to surrender, by
giving notice to the Company, all or part
of this Stock Option to the Company and
to receive cash, payable by the Company,
within thirty (30) days of such notice,
in an amount equal to the amount by which
the Change in Control Price (as such term
is defined in the Plan) per Share on the
date of such election shall exceed the
Option Price multiplied by the number of
Shares surrendered under this Stock
Option; less such amount as the Company
deems necessary to satisfy its liability
to withhold federal, state or local
income or other taxes incurred by reason
of the number of Shares surrendered;
provided, however, that if the Change in
Control is within six (6) months of the
Date of Grant to an Optionee who is an
officer or director of the Company and
subject to Section 16(b) of the Exchange
Act, then no such election shall be made
by such Optionee with respect to this
Stock Option prior to six (6) months from
the Date of ▇▇▇▇▇.
11. Adjustments to Shares. In the
event of any merger, reorganization,
consolidation, recapitalization, stock
dividend, stock split, extraordinary
distribution with respect to the Stock or
other change in corporate structure
affecting the Stock, the Committee or
Board of Directors of the Company may
make such substitution or adjustments in
the aggregate number, kind and option
price of shares subject to this Stock
Option Award Agreement and/or such other
substitutions or adjustments in the
consideration receivable upon exercise as
it may determine to be appropriate in its
sole discretion.
12. Notices. Any written notice
required or permitted under this Stock
Option Award Agreement shall be deemed
given when delivered personally, as
appropriate, either to the Optionee or to
the Executive Compensation Department of
the Company, or when deposited in a
United States Post Office as registered
mail, postage prepaid, addressed, as
appropriate, either to the Optionee at
his or her address set forth above or
such other address as he or she may
designate in writing to the Company, or
to the Attention: Executive
Compensation, BorgWarner Inc., at its
headquarters office or such other address
as the Company may designate in writing
to the Optionee.
13. Failure to Enforce Not a Waiver.
The failure of the Company to enforce at
any time any provision of this Stock
Option Award Agreement shall in no way be
construed to be a waiver of such
provision or of any other provision hereof.
14. Governing Law. All questions
concerning the construction, validity and
interpretation of this Stock Option Award
Agreement shall be governed by and
construed according to the internal law,
and not the law of conflicts, of the
State of Delaware, except that questions
concerning the relative rights of the
Company and the Optionee with respect to
the Shares, shall be governed by the
corporate law of the State of Delaware.
15. Provisions of Plan. The Stock
Option provided for herein is granted
pursuant to the Plan, and said Stock
Option and this Stock Option Award
Agreement are in all respects governed by
the Plan and subject to all of the terms
and provisions thereof, whether such
terms and provisions are incorporated in
this Stock Option Award Agreement solely
by reference or are expressly cited
herein. In the case of any conflict
between the Plan and this Stock Option
Award Agreement, the terms of the Plan
shall control.
IN WITNESS WHEREOF, the Company has
executed this Stock Option Award
Agreement in duplicate on the day and
year first above written.
BORGWARNER INC.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Chairman & Chief Executive Officer
I acknowledge receipt of a copy of the
Plan (either as an attachment hereto or
that has been previously received by me)
and that I have carefully read this Stock
Option Award Agreement and the Plan. I
agree to be bound by all of the
provisions set forth in this Stock Option
Award Agreement and the Plan.
Date
Employee's
Signature
SS# (U.S. Employees Only) Print Name
Home Street Address City, State,
Zip, Country
